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Goldman Sachs shrinking its SPAC business amid regulatory crackdown

160 points by lxm 4y ago

spxdcz 4y ago
Related: I wrote some code that attempts to extract the latest SPAC data (which you can filter/export) from SEC filings as they're filed: https://docoh.com/spacs https://docoh.com/spacs
dqpb 4y ago
I guess that means they won't be changing their name to Goldman SPACs
mqus 4y ago
TIL: SPAC - Special-Purpose Acquisition Company -> https://en.wikipedia.org/wiki/Special-purpose_acquisition_company https://en.wikipedia.org/wiki/Special-purpose_acquisition_co...
- eatonphil 4y ago
  I recommend following Matt Levine's free Money Stuff column if you're into this. https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...
  - bozhark 4y ago
    I recommend not.
    - calmoo 4y ago
      Why not?
      - xoz 4y ago
        Matt Levine, much like most journalists, does not create any of the content, he just writes about it. E.g. etcetera the stories he tells are usually of 3rd parties (like what's happening in financial markets). Would be much more interesting if he had personally experienced or orchestrated what he discusses. Otherwise you may as well just listen to anyone. EDIT: As some people are responding and confused about how journalism works: E.g. he wrote about Elon Musk today yet is just getting his information from other articles or Twitter as I doubt he is speaking with Elon Musk or involved in the deal. At that point it's just hearsay.
        rpgbr 4y ago
        > Matt Levine, much like most journalists, does not create any of the content, he just writes about it. You just literally described a journalist's job. Congrats?
        chowells 4y ago
        > Would be much more interesting if he had personally experienced or orchestrated what he discusses. Like if he had worked at Goldman-Sachs and had direct experience with how large financial institutions function or something?
        xoz 4y ago
        In the past, yes, but I mean what he writes about now. E.g. he wrote about Elon Musk today yet is just getting his information from other articles or Twitter. At that point it's just hearsay.
        JumpCrisscross 4y ago
        > it's just hearsay He has been offering analysis and commentary on the process since the beginning, floating theories for various parties’ positions and debunking silly ideas that were being taken seriously at the time.
        alpha_squared 4y ago
        That's not a prerequisite to journalism, though I guess that can be your standard for it. Musk is notoriously media-hostile, which means it's often very difficult to get direct quotes or responses from him on a story that doesn't try to flatter him. By your standard, that'd mean Musk has unilateral ability to discredit journalism by just not participating.
    - CyanBird 4y ago
      If you don't then you might have a better source for reviewing the day to day of the banking/finance landscape?
  - FabHK 4y ago
    Seconded. Matt Levine's column is informed, informative, witty, and entertaining.
- 3np 4y ago
  Thanks. Thought it was short for Super PAC (https://www.fec.gov/help-candidates-and-committees/filing-pac-reports/registering-super-pac/ https://www.fec.gov/help-candidates-and-committees/filing-pa...) first and found the whole thing confounding.
PedroBatista 4y ago
Looks like Goldman Sachs got a call telling them the SEC police was coming and got out of the party in a hurry ( and what a party it has been.. ) Only retail investors ( aka suckers ) will be holding the bag/beer, as always. I'm curious to know if Goldman Sachs already has an alternative scheme/scam running or it's a case of "chilling out for awhile".
- atlasunshrugged 4y ago
  I'll admit I have some recency bias here as I just re-read The Big Short about the '08 financial crash but I think you're probably right on the first point, they got a tip or heard around the proverbial finance industry watercooler that a crackdown was coming and decided to exit. I'm 100% certain they've got something else in the works, probably more opaque for regulators and the public with less risk to Goldman and a higher profit margin if history is to be believed.
  - chowells 4y ago
    It's not a big secret that the SEC doesn't like SPACs. They make these things really clear before they start taking action. They specifically have an issue with the fact that the prospectus for a de-SPAC merger isn't (yet) subject to all the same reporting rules as an S-1 filing. When companies have to present their financials coldly instead of painting the nice warm dream, it's gonna deflate the market. Between that and the other factors hitting the market now (interest rates and inflation), there just isn't going to be a huge amount of work in the space in the future. You really don't need to assume a conspiracy of some sort is involved when all the completely public factors justify this.
    - jessaustin 4y ago
      This not-big secret is also a not-new secret. These aspects of SPACs have been apparent since the invention of SPACs. What completely public factor accounts for the change in Goldman's policy ? You really don't have to cape up for Goldman. They don't care what we think. They always have enough alumni in the government that they don't have to care. [0] The Biden administration is theoretically less infested with them than previous ones, but e.g. SEC Chair Gary Gensler and Examiner Adam Storch are both former Goldman people. There are probably more but I figured one minute on DDG was enough... [0] https://www.nytimes.com/2017/03/16/business/dealbook/goldman-sachs-goverment-jobs.html https://www.nytimes.com/2017/03/16/business/dealbook/goldman...
SheinhardtWigCo 4y ago
John Tuld: Let me tell you something, Mr. Sullivan. Do you care to know why I'm in this chair with you all? I mean, why I earn the big bucks. Peter Sullivan: Yes. John Tuld: I'm here for one reason and one reason alone. I'm here to guess what the music might do a week, a month, a year from now. That's it. Nothing more. And standing here tonight, I'm afraid that I don't hear - a - thing. Just... silence. https://youtube.com/watch?v=K05sxfa4zdM https://youtube.com/watch?v=K05sxfa4zdM
- toomuchtodo 4y ago
  Both a great lens into part of the GFC and a spectacular cinematic piece. Tremendous scene.
  - ericmay 4y ago
    I agree. Margin Call and The Big Short (the book is sooo good even if you've seen the movie!) are the best two movies that came out of that entire debacle. That scene was enjoyable. They really nailed the casting and conversations.
  - HWR_14 4y ago
    The part that bothered me is that, as I recall, there was no actual margin call in the movie. I guess it all was done in advance of a margin call? I don't recall exactly. Great movie though
    - awad 4y ago
      The plot centers around the possibility of going bankrupt given the high amount of leverage being used on volatile mortgage securities that were starting to fail IIRC. The scheme they cook up to offload their as much of their position as possible the next morning.
    - SkipperCat 4y ago
      By dumping all their portfolio, they avoided the margin call which would have destroyed the company. Their early and bold actions saved the firm. Sadly for the folks on the other end of the trades, it probably crushed them. Margin call is by far the best movie about the financial crisis of 2008 that I've ever seen. I was working in the biz at that time and it all just rang so true. 7 AM pre-market meetings, lots of folks crunching data, Wall Street people actually living in Brooklyn and so much more. Sadly, the movie is so esoteric that it never had a mainstream success. Such a shame because it had great actors and a fantastic script.
joshocar 4y ago
I was literally just talking to a SPAC CEO last weekend that was in a deal with Goldman that got dropped by them. Apparently, there are regulations coming down from the SEC and Goldman didn't want to deal with them and/or the regulations changed the profit calculus.
- mattbrewsbytes 4y ago
  I suspect that similar to how the "market" has various things "priced in", larger financial firms want to stay ahead of regulation and essentially change their business models around ahead of regulations. I think they all operate on the principle of being first for everything is more profitable, including exiting poor investments.
  - ericmay 4y ago
    The best way to think of "priced in" when you are reading something that someone else wrote is to replace those two words with "I don't know". Nothing is priced in. Everything is priced in. When someone thinks of an idea, by virtue of sharing that idea it's deemed to be "priced in".
    - totoglazer 4y ago
      No, that’s kind of nonsense.
      - ericmay 4y ago
        It’s really not. “It’s priced in” is just religion at this point and it’s really just surface level useless banter. The market is random and softly guided by macroeconomic forces. Interest rates go up and then the share price of Google goes up? Priced in. They go down and the share price goes up? Priced in. Company has a bad quarterly? Already pride in by the nefarious “market”. Etc. Recognizing things like that is a good first step toward having a coherent investment thesis.
        4y ago
costcofries 4y ago
All I can think when I hear SPAC is Chamath and well, he should at this point be below everyones line.
- strikelaserclaw 4y ago
  people should stop idolizing others just because they are wealthy, some of these guys are straight up gordon gekko type sociopaths
  - tssva 4y ago
    Unfortunately that is exactly why many people idolize them.
- paxys 4y ago
  1. Get lucky backing the right companies during the biggest tech bull market in history and get very rich 2. Build a Twitter following and preach on topics on which you have zero knowledge or experience 3. People will believe you because you are rich (like they want to be) and so you must obviously be a genius 4. Use that influence to push your political views and/or other hustles like your favorite cryptocurrency, NFTs, SPACs) The standard VC playbook these days
- xiphias2 4y ago
  He had an overconfidence in himself in the last few years, and yes, that line was awful, but I’m sure any of us would have an insensitive line if we would be trying to do what All In podcast does: try to say controversial things as well to get a real debate going.
  - costcofries 4y ago
    I would not. That line along with EVERY SINGLE SPAC he has promoted (created) has absolutely devastated his brand. I am not certain that was his intent.
  - yunohn 4y ago
    > but I’m sure any of us would have an insensitive line if we would be trying to do what All In podcast does: try to say controversial things as well to get a real debate going. “All of us have our weak moments on public television around sensitive topics like genocide, while speaking as a billionaire”
bonecrusher2102 4y ago
Here's the best source I've ever read explaining the SPAC model and it's pitfalls. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3720919 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3720919 And the discussion on HN: https://news.ycombinator.com/item?id=26037059 https://news.ycombinator.com/item?id=26037059
anonu 4y ago
SPACs are ridiculous. The sponsors take the lions share of the profits. Free money in many cases.. and the small investors get absolutely nothing. The whole scheme was rife with manipulation and excess. Not surprised GS is taking the conservative route. It only means they know the hammer is coming down on the shenanigans that took place.
simulate-me 4y ago
It's easy to hate on SPACs. The duds brought to market were numerous. However, it was refreshing to see some new companies go public, which briefly reversed the trend of companies staying private for longer and longer. Rather than hate on SPACs, I would like to ask: has any company that went public via a SPAC been successful?
- jessaustin 4y ago
  Maybe you would have gotten some edifying responses if you had confidently declared "no such company has been successful"... even if you don't believe it, people like to contradict. Even if the purchased firm were solvent after some elapsed time, that wouldn't necessarily mean the SPAC investors had made any money.

160 points by lxm 4y ago

Related: I wrote some code that attempts to extract the latest SPAC data (which you can filter/export) from SEC filings as they're filed: https://docoh.com/spacs https://docoh.com/spacs

dqpb 4y ago

I guess that means they won't be changing their name to Goldman SPACs

mqus 4y ago

TIL: SPAC - Special-Purpose Acquisition Company -> https://en.wikipedia.org/wiki/Special-purpose_acquisition_company https://en.wikipedia.org/wiki/Special-purpose_acquisition_co...

eatonphil 4y ago
I recommend following Matt Levine's free Money Stuff column if you're into this. https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...
- bozhark 4y ago
  I recommend not.
  - calmoo 4y ago
    Why not?
    - xoz 4y ago
      Matt Levine, much like most journalists, does not create any of the content, he just writes about it. E.g. etcetera the stories he tells are usually of 3rd parties (like what's happening in financial markets). Would be much more interesting if he had personally experienced or orchestrated what he discusses. Otherwise you may as well just listen to anyone. EDIT: As some people are responding and confused about how journalism works: E.g. he wrote about Elon Musk today yet is just getting his information from other articles or Twitter as I doubt he is speaking with Elon Musk or involved in the deal. At that point it's just hearsay.
      - rpgbr 4y ago
        > Matt Levine, much like most journalists, does not create any of the content, he just writes about it. You just literally described a journalist's job. Congrats?
      - chowells 4y ago
        > Would be much more interesting if he had personally experienced or orchestrated what he discusses. Like if he had worked at Goldman-Sachs and had direct experience with how large financial institutions function or something?
        xoz 4y ago
        In the past, yes, but I mean what he writes about now. E.g. he wrote about Elon Musk today yet is just getting his information from other articles or Twitter. At that point it's just hearsay.
        JumpCrisscross 4y ago
        > it's just hearsay He has been offering analysis and commentary on the process since the beginning, floating theories for various parties’ positions and debunking silly ideas that were being taken seriously at the time.
        alpha_squared 4y ago
        That's not a prerequisite to journalism, though I guess that can be your standard for it. Musk is notoriously media-hostile, which means it's often very difficult to get direct quotes or responses from him on a story that doesn't try to flatter him. By your standard, that'd mean Musk has unilateral ability to discredit journalism by just not participating.
  - CyanBird 4y ago
    If you don't then you might have a better source for reviewing the day to day of the banking/finance landscape?
- FabHK 4y ago
  Seconded. Matt Levine's column is informed, informative, witty, and entertaining.
3np 4y ago
Thanks. Thought it was short for Super PAC (https://www.fec.gov/help-candidates-and-committees/filing-pac-reports/registering-super-pac/ https://www.fec.gov/help-candidates-and-committees/filing-pa...) first and found the whole thing confounding.

PedroBatista 4y ago

Looks like Goldman Sachs got a call telling them the SEC police was coming and got out of the party in a hurry ( and what a party it has been.. ) Only retail investors ( aka suckers ) will be holding the bag/beer, as always. I'm curious to know if Goldman Sachs already has an alternative scheme/scam running or it's a case of "chilling out for awhile".

atlasunshrugged 4y ago
I'll admit I have some recency bias here as I just re-read The Big Short about the '08 financial crash but I think you're probably right on the first point, they got a tip or heard around the proverbial finance industry watercooler that a crackdown was coming and decided to exit. I'm 100% certain they've got something else in the works, probably more opaque for regulators and the public with less risk to Goldman and a higher profit margin if history is to be believed.
- chowells 4y ago
  It's not a big secret that the SEC doesn't like SPACs. They make these things really clear before they start taking action. They specifically have an issue with the fact that the prospectus for a de-SPAC merger isn't (yet) subject to all the same reporting rules as an S-1 filing. When companies have to present their financials coldly instead of painting the nice warm dream, it's gonna deflate the market. Between that and the other factors hitting the market now (interest rates and inflation), there just isn't going to be a huge amount of work in the space in the future. You really don't need to assume a conspiracy of some sort is involved when all the completely public factors justify this.
  - jessaustin 4y ago
    This not-big secret is also a not-new secret. These aspects of SPACs have been apparent since the invention of SPACs. What completely public factor accounts for the change in Goldman's policy ? You really don't have to cape up for Goldman. They don't care what we think. They always have enough alumni in the government that they don't have to care. [0] The Biden administration is theoretically less infested with them than previous ones, but e.g. SEC Chair Gary Gensler and Examiner Adam Storch are both former Goldman people. There are probably more but I figured one minute on DDG was enough... [0] https://www.nytimes.com/2017/03/16/business/dealbook/goldman-sachs-goverment-jobs.html https://www.nytimes.com/2017/03/16/business/dealbook/goldman...

SheinhardtWigCo 4y ago

John Tuld: Let me tell you something, Mr. Sullivan. Do you care to know why I'm in this chair with you all? I mean, why I earn the big bucks. Peter Sullivan: Yes. John Tuld: I'm here for one reason and one reason alone. I'm here to guess what the music might do a week, a month, a year from now. That's it. Nothing more. And standing here tonight, I'm afraid that I don't hear - a - thing. Just... silence. https://youtube.com/watch?v=K05sxfa4zdM https://youtube.com/watch?v=K05sxfa4zdM

toomuchtodo 4y ago
Both a great lens into part of the GFC and a spectacular cinematic piece. Tremendous scene.
- ericmay 4y ago
  I agree. Margin Call and The Big Short (the book is sooo good even if you've seen the movie!) are the best two movies that came out of that entire debacle. That scene was enjoyable. They really nailed the casting and conversations.
- HWR_14 4y ago
  The part that bothered me is that, as I recall, there was no actual margin call in the movie. I guess it all was done in advance of a margin call? I don't recall exactly. Great movie though
  - awad 4y ago
    The plot centers around the possibility of going bankrupt given the high amount of leverage being used on volatile mortgage securities that were starting to fail IIRC. The scheme they cook up to offload their as much of their position as possible the next morning.
  - SkipperCat 4y ago
    By dumping all their portfolio, they avoided the margin call which would have destroyed the company. Their early and bold actions saved the firm. Sadly for the folks on the other end of the trades, it probably crushed them. Margin call is by far the best movie about the financial crisis of 2008 that I've ever seen. I was working in the biz at that time and it all just rang so true. 7 AM pre-market meetings, lots of folks crunching data, Wall Street people actually living in Brooklyn and so much more. Sadly, the movie is so esoteric that it never had a mainstream success. Such a shame because it had great actors and a fantastic script.

joshocar 4y ago

I was literally just talking to a SPAC CEO last weekend that was in a deal with Goldman that got dropped by them. Apparently, there are regulations coming down from the SEC and Goldman didn't want to deal with them and/or the regulations changed the profit calculus.

mattbrewsbytes 4y ago
I suspect that similar to how the "market" has various things "priced in", larger financial firms want to stay ahead of regulation and essentially change their business models around ahead of regulations. I think they all operate on the principle of being first for everything is more profitable, including exiting poor investments.
- ericmay 4y ago
  The best way to think of "priced in" when you are reading something that someone else wrote is to replace those two words with "I don't know". Nothing is priced in. Everything is priced in. When someone thinks of an idea, by virtue of sharing that idea it's deemed to be "priced in".
  - totoglazer 4y ago
    No, that’s kind of nonsense.
    - ericmay 4y ago
      It’s really not. “It’s priced in” is just religion at this point and it’s really just surface level useless banter. The market is random and softly guided by macroeconomic forces. Interest rates go up and then the share price of Google goes up? Priced in. They go down and the share price goes up? Priced in. Company has a bad quarterly? Already pride in by the nefarious “market”. Etc. Recognizing things like that is a good first step toward having a coherent investment thesis.
      - 4y ago

costcofries 4y ago

All I can think when I hear SPAC is Chamath and well, he should at this point be below everyones line.

strikelaserclaw 4y ago
people should stop idolizing others just because they are wealthy, some of these guys are straight up gordon gekko type sociopaths
- tssva 4y ago
  Unfortunately that is exactly why many people idolize them.
paxys 4y ago
1. Get lucky backing the right companies during the biggest tech bull market in history and get very rich 2. Build a Twitter following and preach on topics on which you have zero knowledge or experience 3. People will believe you because you are rich (like they want to be) and so you must obviously be a genius 4. Use that influence to push your political views and/or other hustles like your favorite cryptocurrency, NFTs, SPACs) The standard VC playbook these days
xiphias2 4y ago
He had an overconfidence in himself in the last few years, and yes, that line was awful, but I’m sure any of us would have an insensitive line if we would be trying to do what All In podcast does: try to say controversial things as well to get a real debate going.
- costcofries 4y ago
  I would not. That line along with EVERY SINGLE SPAC he has promoted (created) has absolutely devastated his brand. I am not certain that was his intent.
- yunohn 4y ago
  > but I’m sure any of us would have an insensitive line if we would be trying to do what All In podcast does: try to say controversial things as well to get a real debate going. “All of us have our weak moments on public television around sensitive topics like genocide, while speaking as a billionaire”

bonecrusher2102 4y ago

Here's the best source I've ever read explaining the SPAC model and it's pitfalls. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3720919 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3720919 And the discussion on HN: https://news.ycombinator.com/item?id=26037059 https://news.ycombinator.com/item?id=26037059

anonu 4y ago

SPACs are ridiculous. The sponsors take the lions share of the profits. Free money in many cases.. and the small investors get absolutely nothing. The whole scheme was rife with manipulation and excess. Not surprised GS is taking the conservative route. It only means they know the hammer is coming down on the shenanigans that took place.

simulate-me 4y ago

It's easy to hate on SPACs. The duds brought to market were numerous. However, it was refreshing to see some new companies go public, which briefly reversed the trend of companies staying private for longer and longer. Rather than hate on SPACs, I would like to ask: has any company that went public via a SPAC been successful?

jessaustin 4y ago
Maybe you would have gotten some edifying responses if you had confidently declared "no such company has been successful"... even if you don't believe it, people like to contradict. Even if the purchased firm were solvent after some elapsed time, that wouldn't necessarily mean the SPAC investors had made any money.